Hello, can you please explain why if the profit margin is 20% of the sales price it means the profit margin is 25% on the cost examination? Where does the 25% come from? This is question 7.6 part b.

4 0 anonymous answered this 8,557 answers mous Was this answer helpful? B 8,557 answers 1. Using RVU methodology, Computation of the estimated cost per type of examination: Level Type Level 1 Level II Level III 20 No. of RVU's Required Total No. of Examinations 10 2,400 800 30 400 Total RVU's Required Annual Laboratory Cost Cost per Unit RVU RVU's Required 24,000 16,000 12,000 52,000 $ 5,00,000.00 $ 9.62 Level Type Level 1 Level 11 Level III No. of RVU's Required 10 20 30 Cost per Unit RVU $ 9.62 $ 9.62 $ 9.62 Cost of Examination $ 96.15 $ 192.31 $ 288.46 2. Pricing of Each Examination The Profit Margin is 20% of Sales price it means profit margin of 25% on cost of examination Level Type Level 1 Level 11 Level III Cost of Examination $ 96.15 $ 192.31 $ 288.46 Profit Margin @ 25% $ 24.04 $ 48.08 $ 72.12 Pricing $ 120.19 $ 240.38 $360.58 Hide comments